Is anyone tempted by value investing right now?

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K8ya
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Is anyone tempted by value investing right now?

Post by K8ya »

I personally am; index funds are at high P/Es right now. It goes against the Bogle ethos but my god, at some point you have to look at the price of the thing you're buying and hesitate.
Marseille07
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Re: Is anyone tempted by value investing right now?

Post by Marseille07 »

I just stay the course. Jumping around on P/E is market timing.
anoop
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Re: Is anyone tempted by value investing right now?

Post by anoop »

K8ya wrote: Sat Sep 04, 2021 3:34 pm I personally am; index funds are at high P/Es right now. It goes against the Bogle ethos but my god, at some point you have to look at the price of the thing you're buying and hesitate.
You could invest in something that tracks a value index.
https://finance.yahoo.com/quote/SPYV/holdings?p=SPYV

Ordinarily I would buy value and stick with value but my 401k doesn't offer it.
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arcticpineapplecorp.
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Re: Is anyone tempted by value investing right now?

Post by arcticpineapplecorp. »

K8ya wrote: Sat Sep 04, 2021 3:34 pm I personally am; index funds are at high P/Es right now. It goes against the Bogle ethos but my god, at some point you have to look at the price of the thing you're buying and hesitate.
why just hesitate?

if the thing you bought before has become expensive, wouldn't you not only NOT buy more of that thing...but also SELL that thing you think has become too inflated?

Are you therefore selling the stock market that is making you hesitate?

If not, why not?

I am only being cheeky of course.

If you have a plan or IPS you'd be rebalancing between stocks and bonds (selling if stocks got outside your rebalancing band).

Your IPS also will tell you if you should be investing in Value stocks aside from the total market, because you wish to have a tilt to value. If that's the case, you'd always have a percentage of your portfolio in value and you'd only be buying more of that if your rebalancing band told you to do so.

Do you have a long term plan?
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events.
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Beensabu
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Re: Is anyone tempted by value investing right now?

Post by Beensabu »

Yeah. I did it in my own whackadoodle way before I realized just how ridiculous S&P 500 pricing had become based on actual rate of earnings growth. While I did experience momentary tracking regret, I got over it and am happy with what I did and will not be doing anything different for a long time. But I'm not you. You are you.

Just remember: it's never all or nothing. Total market funds are the core of a portfolio. Whether "core" means 30% or 50% or 70% or 100% is up to the individual. But they're not to be abandoned. And ultimately, the stock:bond ratio lever is more effective at managing risk than slicing up those equities/fixed income allocations.

Also, temptation is different from conviction. It implies that you wish to do something wrong or unwise. Don't do something you don't believe in.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
namajones
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Re: Is anyone tempted by value investing right now?

Post by namajones »

K8ya wrote: Sat Sep 04, 2021 3:34 pm I personally am; index funds are at high P/Es right now. It goes against the Bogle ethos but my god, at some point you have to look at the price of the thing you're buying and hesitate.
No. Just invest in a vehicle like VT. Don't call or time the market. Profit from human endeavor, all up and down the country and sector spectrum.
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Re: Is anyone tempted by value investing right now?

Post by nisiprius »

Almost everything is either underperforming the market or outperforming the market.

So I'm "tempted" by almost everything. I'm tempted by the outperformers through fear of missing out. I'm tempted by the underperformers because they "are cheap." If I allowed myself to act on temptation I don't think I could stay the course for very long. I'd be changing my portfolio several times a year.
arcticpineapplecorp. wrote: Sat Sep 04, 2021 3:47 pm ...Do you have a long term plan?...
A lot of people have trouble grasping the idea that a long-term plan is not a long-term plan if you revise it annually.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
BF3000
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Re: Is anyone tempted by value investing right now?

Post by BF3000 »

I agree with OP’s sentiment. When the gulf between growth and value is the widest in history, and the broad market index is highly concentrated in a small number of technology names, I don’t think it is crazy to think that adding more value exposure will (1) possibly allow for outperformance via mean reversion and (2) increase diversification by diluting the exposure to mega cap tech.

I do this by holding both market cap funds and rafi fundamental index funds. The latter dynamically adjusts the value exposure as the gulf widens. A cheaper way would be to add a market cap value fund. In either case, the core is still cheap, broad market funds.

You would not find many in this board who share this view.
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Re: Is anyone tempted by value investing right now?

Post by rockstar »

I'm splitting money three ways today: QQQ/VOO/VNQ. And I'm maxing out I Bonds purchases for the foreseeable future. Whenever I go outside of those three, I tend to run into trouble with the exception of TQQQ, which keeps making me money, but my current holding is between 2.5-5% of my portfolio right now. My GLD purchase has done nothing for me. My IWM purchase is pretty much flat. Going forward, I'm keeping it simple.

Keep it simple.

Concerning valuations, a 10 year treasury approximates to 75ish earnings (1.0/1.32*100). The S&P500 is only around 30ish. It doesn't look expensive at all. Bonds look crazy expensive in comparison. My biggest valuation concern is bonds, which is why other than I Bonds I'm avoiding them.

https://www.wsj.com/market-data/stocks/peyields

https://www.bloomberg.com/markets/fixed-income
typical.investor
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Re: Is anyone tempted by value investing right now?

Post by typical.investor »

BF3000 wrote: Sat Sep 04, 2021 5:17 pm I agree with OP’s sentiment. When the gulf between growth and value is the widest in history, and the broad market index is highly concentrated in a small number of technology names, I don’t think it is crazy to think that adding more value exposure will (1) possibly allow for outperformance via mean reversion and (2) increase diversification by diluting the exposure to mega cap tech.

I do this by holding both market cap funds and rafi fundamental index funds. The latter dynamically adjusts the value exposure as the gulf widens. A cheaper way would be to add a market cap value fund. In either case, the core is still cheap, broad market funds.

You would not find many in this board who share this view.
I have a similar strategy and include international funds as well.

International and value have been difficult to hold in the last decade from an underperformance standpoint, so I added a slice of HFEA (leveraged stocks balance by leveraged bonds) taken from total market. That let me increase my US cap weighted exposure without selling and abandoning either international or value.

I hold bonds to rebalance from and provide safety in the case of simultaneous equity crash and job loss. Am not able to reduce expenses as I could when younger and without dependants.
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arcticpineapplecorp.
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Re: Is anyone tempted by value investing right now?

Post by arcticpineapplecorp. »

nisiprius wrote: Sat Sep 04, 2021 4:21 pm Almost everything is either underperforming the market or outperforming the market.

So I'm "tempted" by almost everything. I'm tempted by the outperformers through fear of missing out. I'm tempted by the underperformers because they "are cheap." If I allowed myself to act on temptation I don't think I could stay the course for very long. I'd be changing my portfolio several times a year.
arcticpineapplecorp. wrote: Sat Sep 04, 2021 3:47 pm ...Do you have a long term plan?...
A lot of people have trouble grasping the idea that a long-term plan is not a long-term plan if you revise it annually.
yes and for the OP: having a long term plan doesn't mean NEVER revising a plan, but rather you may need to revise/re-look at your plan if YOUR circumstances change (i.e., you've met your goal, get married, have kids, change jobs, etc) rather than if SHORT term circumstances change (like market conditions).

If you (OP) want to change now due to value being cheaper than total, you will find yourself constantly changing your "plan" everytime something becomes cheaper.

Instead hold the assets you want according to your allocation and whether or not you want to tilt to value (and/or small) and then all you have to do is simply rebalance according to what your plan says (rebalancing bands as an example).
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events.
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Re: Is anyone tempted by value investing right now?

Post by jebmke »

arcticpineapplecorp. wrote: Sat Sep 04, 2021 3:47 pm Your IPS also will tell you if you should be investing in Value stocks aside from the total market, because you wish to have a tilt to value. If that's the case, you'd always have a percentage of your portfolio in value and you'd only be buying more of that if your rebalancing band told you to do so.
I agree; have to have staying power because tilts can disappoint for a long time. I know, SCV tilted for many many years (heavier for a long time but still some now). I would add that it is a waste of time to do it in small increments. 5% isn't going to move the needle on the total portfolio and just becomes a distraction. IMO anything less than 20-25% isn't worth bothering with.
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Re: Is anyone tempted by value investing right now?

Post by sf_tech_saver »

No, but I did start buying 50/50 VT/VTI (Total world, total US Stock).

VT is a 16x P/E, while VTI is 24x.

The reason to be extremely cautious about a value tilt right now is that the companies with a huge multiple are changing the world. Buying VT still allows me to own them, just in a more diversified proportion I never need to rebalance.
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Re: Is anyone tempted by value investing right now?

Post by Bama12 »

Stay the course as always and invest in value....

Small and Large Value.
illumination
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Re: Is anyone tempted by value investing right now?

Post by illumination »

Yes, I'm tempted. I agree with all those points with respect to the big divergence. I'm also tempted with international, but less so.
Certain sectors look very bubbly, but I'm terrible at timing these things and I've thought that for a while and it just keeps going up.
Percentage wise I have a small amount in value funds. It will probably always stay that way, but may add more.

If I had room in tax deferred for new money, I would probably add more to value. I don't like value funds in taxable accounts.

It's a form of market timing. I also remember telling myself that the next time we get to nosebleed P/E levels like the dot.com bubble I would not just blindly keep buying and that valuations matter. Not boglehead approved.
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Re: Is anyone tempted by value investing right now?

Post by LilyFleur »

anoop wrote: Sat Sep 04, 2021 3:41 pm
K8ya wrote: Sat Sep 04, 2021 3:34 pm I personally am; index funds are at high P/Es right now. It goes against the Bogle ethos but my god, at some point you have to look at the price of the thing you're buying and hesitate.
You could invest in something that tracks a value index.
https://finance.yahoo.com/quote/SPYV/holdings?p=SPYV

Ordinarily I would buy value and stick with value but my 401k doesn't offer it.
My 401k doesn't, either, so I own a nice chunk of SCHD in my brokerage account.
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Re: Is anyone tempted by value investing right now?

Post by muffins14 »

sf_tech_saver wrote: Sat Sep 04, 2021 5:55 pm No, but I did start buying 50/50 VT/VTI (Total world, total US Stock).

VT is a 16x P/E, while VTI is 24x.

The reason to be extremely cautious about a value tilt right now is that the companies with a huge multiple are changing the world. Buying VT still allows me to own them, just in a more diversified proportion I never need to rebalance.
You could still tilt to value and carry a big heap of VT
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Re: Is anyone tempted by value investing right now?

Post by sf_tech_saver »

muffins14 wrote: Sat Sep 04, 2021 6:51 pm
sf_tech_saver wrote: Sat Sep 04, 2021 5:55 pm No, but I did start buying 50/50 VT/VTI (Total world, total US Stock).

VT is a 16x P/E, while VTI is 24x.

The reason to be extremely cautious about a value tilt right now is that the companies with a huge multiple are changing the world. Buying VT still allows me to own them, just in a more diversified proportion I never need to rebalance.
You could still tilt to value and carry a big heap of VT
Tilting implies I have some insights into the market that allow me to break with a market-weighted portfolio.

Buying VT only implies that in times of extreme interest rate stimulation I'd prefer to own the broadest market-weighted index that I can.

Once you start trying to out-smart the market ... forever will it occupy your mind :)
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Re: Is anyone tempted by value investing right now?

Post by Trader Joe »

K8ya wrote: Sat Sep 04, 2021 3:34 pm I personally am; index funds are at high P/Es right now. It goes against the Bogle ethos but my god, at some point you have to look at the price of the thing you're buying and hesitate.
No. I continue to invest in VTSAX/VFIAX every week, per plan.
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Re: Is anyone tempted by value investing right now?

Post by bloom2708 »

I only buy the value that shoots up.

I avoid the value that goes down further.

Actually, I just buy the total US market. 🤓
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Re: Is anyone tempted by value investing right now?

Post by KlangFool »

OP,

If you believe that the market can go crazy/irrational, then, there is a place for active management. 40% of my portfolio is in the Wellington Fund. It is a hedge against passive indexing.

No, this is not new for me. After Telecom Bust, I decided to put a large portion of my portfolio into the Wellington Fund.

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Re: Is anyone tempted by value investing right now?

Post by quattro73 »

KlangFool wrote: Sat Sep 04, 2021 8:35 pm OP,

If you believe that the market can go crazy/irrational, then, there is a place for active management. 40% of my portfolio is in the Wellington Fund. It is a hedge against passive indexing.

No, this is not new for me. After Telecom Bust, I decided to put a large portion of my portfolio into the Wellington Fund.

KlangFool
Interesting and thank you.
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Re: Is anyone tempted by value investing right now?

Post by Actin »

If you want to buy value stocks or funds, then just do it. This forum and Bogleheads isn't a deathcult. You don't need validation or approval for your purchases.

People here will tell you that you're market timing, but a lot of these same people have large percentages of international funds and act like that's completely different from value tilts.

Now, since you asked, I wouldn't. "Value" is very subjective and most are not actually good values.
Last edited by Actin on Sat Sep 04, 2021 8:49 pm, edited 1 time in total.
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Re: Is anyone tempted by value investing right now?

Post by HanSolo »

illumination wrote: Sat Sep 04, 2021 6:33 pm It's a form of market timing. I also remember telling myself that the next time we get to nosebleed P/E levels like the dot.com bubble I would not just blindly keep buying and that valuations matter. Not boglehead approved.
Not necessarily. Lots of Bogleheads have tilts and/or do something different from a standard 3-fund (SCV, REITs, TIPS, 100/0, domestic only, etc.). Bogle himself had tilts.

OP: I think your tilt is OK as long as you're aware that sometimes they can go down as much or more than growth funds during a downturn, as they demonstrated in 1Q 2020.

As long as you know what you're buying and you accept the risks, I'm not seeing a problem.
sf_tech_saver wrote: Sat Sep 04, 2021 7:07 pm Tilting implies I have some insights into the market that allow me to break with a market-weighted portfolio.
Not necessarily. I have tilts without having any such insights. I just have likes and dislikes.
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Re: Is anyone tempted by value investing right now?

Post by KlangFool »

illumination wrote: Sat Sep 04, 2021 6:33 pm
It's a form of market timing.
illumination,

It is not market timing if the investor had been doing this all the while without looking at the P/E.

I have 10% SCV and 10% Intermediate-Term Treasury as part of my mini-Larry portfolio. It is part of my strategy.

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Re: Is anyone tempted by value investing right now?

Post by HanSolo »

KlangFool wrote: Sat Sep 04, 2021 8:52 pm It is not market timing if the investor had been doing this all the while without looking at the P/E.
It's also not market timing if screening out high-PE stocks is done consistently over time (i.e., if looking at the P/E is simply part of the usual screening process).
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Re: Is anyone tempted by value investing right now?

Post by roth evangelist »

About 20% of my invested portfolio is in value. Some combination of VTV/VOE/VBR (large, mid and small value ETFs), although I'm starting to move away from that to a more simplified value allocation of VFVA (Vanguard value factor ETF) to replace them. Others like Avantis' ETFs representing U.S., international developed and soon to start trading, emerging markets value. As long as you aren't just performance chasing and actually understand why value can be a good long-term investment and understand the volatility risks, I would go for it. I like Ben Felix's YouTube channel and his explanation of value factor investing. Those who say you should stay away from value because it's underperformed growth are just the other side of those who run toward an asset that's performed well recently.
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Re: Is anyone tempted by value investing right now?

Post by illumination »

KlangFool wrote: Sat Sep 04, 2021 8:52 pm
illumination wrote: Sat Sep 04, 2021 6:33 pm
It's a form of market timing.
illumination,

It is not market timing if the investor had been doing this all the while without looking at the P/E.

I have 10% SCV and 10% Intermediate-Term Treasury as part of my mini-Larry portfolio. It is part of my strategy.

KlangFool
The being "tempted" part from the OP is what I was referring to. If you're changing your usual strategy based on the idea you think one is currently undervalued, that seems like market timing to me.

I have all sorts of "tilts" and do all kinds of non-boglehead things, so I'm not disparaging any of it, just saying the usual conventional Boglehead wisdom would be "nobody knows anything" and "total market" at all times.
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Re: Is anyone tempted by value investing right now?

Post by firebirdparts »

I guess there are worse things that could happen to a guy than value investing. It beats going broke. It seems like some people get pretty fanatical about attacking these portfolio tilts, but I just think if you've got an IPS to tilt with, you're already doing okay.

I have not been all that tempted.
Last edited by firebirdparts on Sat Sep 04, 2021 9:03 pm, edited 1 time in total.
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Re: Is anyone tempted by value investing right now?

Post by Actin »

roth evangelist wrote: Sat Sep 04, 2021 8:56 pm Those who say you should stay away from value because it's underperformed growth are just the other side of those who run toward an asset that's performed well recently.
Hypothetical question. If something has already underperformed for almost thirty years, how many more decades of underperformance would it take before you conceited that that investment style is dead?
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Re: Is anyone tempted by value investing right now?

Post by nedsaid »

BF3000 wrote: Sat Sep 04, 2021 5:17 pm I agree with OP’s sentiment. When the gulf between growth and value is the widest in history, and the broad market index is highly concentrated in a small number of technology names, I don’t think it is crazy to think that adding more value exposure will (1) possibly allow for outperformance via mean reversion and (2) increase diversification by diluting the exposure to mega cap tech.

I do this by holding both market cap funds and rafi fundamental index funds. The latter dynamically adjusts the value exposure as the gulf widens. A cheaper way would be to add a market cap value fund. In either case, the core is still cheap, broad market funds.

You would not find many in this board who share this view.
Valuations do matter and when the valuation gap between Growth and Value is at a 95% percentile compared to history, I think it was about 100% before the Value rally, I think it is a clue that perhaps the market itself is getting too expensive. If you are concerned about this, take a slice of your Total Stock Market Index and perhaps buy a Value Index. With a pizza analogy, a slice might be 20% or 25% at most of your Total Market Stock Fund fund. I think BF3000 has a good approach.

If you are relatively young, up to age 40, you probably shouldn't give any of this a thought. It is us older investors, I am a near retiree, who should think more about valuation gaps and stock concentration. Just an aside, the S&P 500 historically does tend to be top heavy with a few names at the top, we are a bit top heavy right now compared to history but not in dramatic fashion. Also forward P/E for the Total Stock Market Index is about 21, a bit high but not outrageously so particularly in the light of very low interest rates.

So I have concern regarding valuation gaps and I believe in diversifying across factors within a portfolio. Lots of folks here would not agree with me, so this opinion would be a minority view here on the forum.
Last edited by nedsaid on Sat Sep 04, 2021 9:07 pm, edited 1 time in total.
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firebirdparts
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Re: Is anyone tempted by value investing right now?

Post by firebirdparts »

Actin wrote: Sat Sep 04, 2021 9:03 pm
Hypothetical question. If something has already underperformed for almost thirty years, how many more decades of underperformance would it take before you conceited that that investment style is dead?
Never for me. Not that it matters.
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Re: Is anyone tempted by value investing right now?

Post by KlangFool »

Actin wrote: Sat Sep 04, 2021 9:03 pm
roth evangelist wrote: Sat Sep 04, 2021 8:56 pm Those who say you should stay away from value because it's underperformed growth are just the other side of those who run toward an asset that's performed well recently.
Hypothetical question. If something has already underperformed for almost thirty years, how many more decades of underperformance would it take before you conceited that that investment style is dead?
Actin,

Are you buying value because it under perform or over perform? Or, it is part of your portfolio strategy?

I am pairing my SCV with Intermediate-Term Treasury. It is a Barbell strategy. Their oscillation counteract each other. So, why would I care whether SCV underperform or overperform as long as SCV + Intermediate-Term Treasury provide great portfolio return.

<<If something has already underperformed for almost thirty years,>>

You could use the same argument to be 100% stock too if you are not interested in the portfolio return.

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Re: Is anyone tempted by value investing right now?

Post by roth evangelist »

Actin wrote: Sat Sep 04, 2021 9:03 pm
roth evangelist wrote: Sat Sep 04, 2021 8:56 pm Those who say you should stay away from value because it's underperformed growth are just the other side of those who run toward an asset that's performed well recently.
Hypothetical question. If something has already underperformed for almost thirty years, how many more decades of underperformance would it take before you conceited that that investment style is dead?
Didn't value outperform growth after the tech crash? That was 20 years ago. Anyway, I'm not qualified to really answer that question. Maybe 50 or more?
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Re: Is anyone tempted by value investing right now?

Post by UpperNwGuy »

I am not tempted. I am very committed to staying the course with Total Stock. My IPS says "ignore valuations."
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JoMoney
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Re: Is anyone tempted by value investing right now?

Post by JoMoney »

Honestly, yes.
P/E ratios are problematic to look at though - Earnings over the past year or so had many stocks on the "value" side with zero (or negative) earnings giving them no calculable P/E ratio. If they're expected to return to some normal earnings, the forward earnings projects do look better for value, and the Price/Book ratios on the growth side look pretty extreme. I think there is a story that even the "growth" stock multiples could be justified given extremely low current interest rates if it's expected that the earnings growth in that area remains relatively high and interest rates remain this low. But I also think changes in interest rates would have a more severe impact there if a rise in interest rates adjusts price multiples downward, with "growth" being comparatively a higher theoretical duration security.
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Re: Is anyone tempted by value investing right now?

Post by rockstar »

roth evangelist wrote: Sat Sep 04, 2021 9:11 pm
Actin wrote: Sat Sep 04, 2021 9:03 pm
roth evangelist wrote: Sat Sep 04, 2021 8:56 pm Those who say you should stay away from value because it's underperformed growth are just the other side of those who run toward an asset that's performed well recently.
Hypothetical question. If something has already underperformed for almost thirty years, how many more decades of underperformance would it take before you conceited that that investment style is dead?
Didn't value outperform growth after the tech crash? That was 20 years ago. Anyway, I'm not qualified to really answer that question. Maybe 50 or more?
Small cap. REITs. Gold. They all outperformed the S&P500 over the last 20 years.
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JoMoney
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Re: Is anyone tempted by value investing right now?

Post by JoMoney »

rockstar wrote: Sat Sep 04, 2021 10:25 pm
roth evangelist wrote: Sat Sep 04, 2021 9:11 pm
Actin wrote: Sat Sep 04, 2021 9:03 pm
roth evangelist wrote: Sat Sep 04, 2021 8:56 pm Those who say you should stay away from value because it's underperformed growth are just the other side of those who run toward an asset that's performed well recently.
Hypothetical question. If something has already underperformed for almost thirty years, how many more decades of underperformance would it take before you conceited that that investment style is dead?
Didn't value outperform growth after the tech crash? That was 20 years ago. Anyway, I'm not qualified to really answer that question. Maybe 50 or more?
Small cap. REITs. Gold. They all outperformed the S&P500 over the last 20 years.
They did over the 20 years, Sep-2001 to Sep-2021 , but not the 20 years prior Sep-1981 to Sep-2001 or over the entire 40 year period Sep-1981 to Sep-2021


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HanSolo
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Re: Is anyone tempted by value investing right now?

Post by HanSolo »

Actin wrote: Sat Sep 04, 2021 9:03 pm Hypothetical question. If something has already underperformed for almost thirty years, how many more decades of underperformance would it take before you conceited that that investment style is dead?
"Conceited"?

If I understand your question correctly, then it would seem you're advocating 100/0 (since bonds underperformed stocks for decades). And I guess you're advocating a growth-only portfolio (because total market underperformed growth).

The answer to your question is that certain investment styles may be dead for you while not being dead for others.
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Forester
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Re: Is anyone tempted by value investing right now?

Post by Forester »

In my pension account I buy the cheapest 6 national ETFs. Every April I enter the PE, Div yield & price-to-book in Excel for every country ETF I can access, then do a combined sort. The cheapest this year were Russia, Korea, Poland, Spain, Turkey, China, next year some of the names will change. It's a fun little project.
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UpperNwGuy
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Re: Is anyone tempted by value investing right now?

Post by UpperNwGuy »

Forester wrote: Sun Sep 05, 2021 4:10 am In my pension account I buy the cheapest 6 national ETFs. Every April I enter the PE, Div yield & price-to-book in Excel for every country ETF I can access, then do a combined sort. The cheapest this year were Russia, Korea, Poland, Spain, Turkey, China, next year some of the names will change. It's a fun little project.
How do you account for the fact that some of the countries you listed for this year were "cheap for a reason"?
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Forester
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Re: Is anyone tempted by value investing right now?

Post by Forester »

UpperNwGuy wrote: Sun Sep 05, 2021 4:43 am
Forester wrote: Sun Sep 05, 2021 4:10 am In my pension account I buy the cheapest 6 national ETFs. Every April I enter the PE, Div yield & price-to-book in Excel for every country ETF I can access, then do a combined sort. The cheapest this year were Russia, Korea, Poland, Spain, Turkey, China, next year some of the names will change. It's a fun little project.
How do you account for the fact that some of the countries you listed for this year were "cheap for a reason"?
How do you account for the fact that a human, or herd of humans, likely cannot handicap a national economy with any degree of precision? If the aversion is well-founded BUT excessive, there's the premium to holding "junky" stock markets.

To test your POV vs my POV, I do intend to purchase CAPE data and backtest this "cheap country basket" strategy for the 2010s, which is a decade known for Value's failure. I'd be intrigued to see whether the cheap country strat kept pace with the global index and/or a generic all-country value index.
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invest4
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Re: Is anyone tempted by value investing right now?

Post by invest4 »

Been there, done that...no more. If it's not part of my overall plan / approach, I'm simply no longer interested in trying to figure out when I should be tilting one way or another...mainly because I am terrible at predicting the future.
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Re: Is anyone tempted by value investing right now?

Post by dogagility »

Not tempted. Checked my IPS and there is no mention in it of value, Shiller, CAPE, or P/anything.

Thinking of adding a statement in my IPS to not be tempted by the value, Shiller, CAPE, or P/anything siren call. :wink:
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Re: Is anyone tempted by value investing right now?

Post by Triple digit golfer »

Tempted, maybe. I don't know that I'd even go that far. I think a lot. I often think that maybe I should be in less equities because maybe there's a crash coming. Or more equities because maybe bonds are going to have low returns. Or more international because they're "due." Or less because the future is technology and that's here at home. And on and on and on.

So I stick with my long term plan and move onto thinking about weightlifting or golf instead.
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Re: Is anyone tempted by value investing right now?

Post by PicassoSparks »

I’ve not yet been quite persuaded that value (and the factors in general) aren’t just mirages to be found in the moire pattern of imperfect models layered over noisy data.

Part of the problem is that everyone seems to have a different definition of what value investing is. Price to book? Price to earnings? PEG? FCF? Very suspicious to have a systemic factor that does not have stable metrics.

I particularly enjoyed AQR’s The Long Run is Lying to You https://www.aqr.com/Insights/Perspecti ... ing-to-You which showed that if you tilt your head juuuust the right way and look at the data, value has actually outperformed except for the minor quirk of history that it hasn’t.

I think that the principle of buying stocks that have fallen below their intrinsic value is a promising approach to doing well in the market. I am extremely suspicious of the idea that such opportunities can be found statistically.
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Re: Is anyone tempted by value investing right now?

Post by detroitbabu »

This guy - Mohnish Pabrai - follows value investing strategy and has done very well over the last 25 years. He is a follower of Warren Buffet.
Minimum $5M investment. 6/25 fee structure (6% hurdle/watermark --> no fees until the return is >6% then 25% of anything excess of 6%); no management fees.

https://www.investopedia.com/articles/i ... estors.asp
https://www.youtube.com/watch?v=p5xt09gAi-U
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Re: Is anyone tempted by value investing right now?

Post by AerialWombat »

K8ya wrote: Sat Sep 04, 2021 3:34 pm I personally am; index funds are at high P/Es right now. It goes against the Bogle ethos but my god, at some point you have to look at the price of the thing you're buying and hesitate.
Since my largest securities holding is Wellesley, and they have a value focus on the equities side, I guess by default yes, I’m into value. Not consciously, though. Staying the course.
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Re: Is anyone tempted by value investing right now?

Post by cheapskate »

Over *long* periods of time all of Growth, Value, TSM are going to do well. And they will be close. It doesn't matter much which style you pick, what matters is staying in what you pick through good times and bad, without panicing. Pick the style that you are psychologically comfortable with and stick with it without wavering. FWIW, I am heavily value tilted and have a larger allocation to International than most Bogleheads (at nearly 50%). I don't really look at the relative performance of the stuff I am in compared to the S&P500, so I don't even know. But this is what I am mentally comfortable with, and this is what I will be able to stick with through decades.
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Re: Is anyone tempted by value investing right now?

Post by MrCheapo »

K8ya wrote: Sat Sep 04, 2021 3:34 pm I personally am; index funds are at high P/Es right now. It goes against the Bogle ethos but my god, at some point you have to look at the price of the thing you're buying and hesitate.
The way I'm handling it, is all future investments are going into either value or sectors that benefit from high inflation. But all my existing index funds are staying the course.
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